Is a Broker a Salesperson?
What Can CRE Learn about Sales & Marketing From a Technology Company?
Let me first explain why I’m writing about the brokerage side of commercial real estate when our company, Building Engines, and our product supports the operations side of the business and we generally write exclusively about issues related to that.
I attended a terrific NAIOP Trends & Technology Marketing Conference in Boston several weeks ago and struck up a conversation during one of the breaks with a local broker. In the course of the discussion, he asked about my role at Building Engines and I explained that in addition to overall responsibility for our brand, much of my job involves supporting our sales team and I shared some of our activities and the defined, metrics-driven process we have. His reaction was a mix of envy and disbelief that the same process could operate in commercial real estate. He indicated that although he was part of good-sized local firm, marketing and brokers didn’t work together the same way. – Marketing focused primarily on the company brand and promoting specific services, products and properties, but felt that he was in large part, solely responsible for developing his book of business without any help from or interaction with marketing.
This exchange led to thinking about what was so different about our two worlds and why they couldn’t operate similarly? In CRE, there’s a product – buildings and available space, and there’s a definable/reachable market – companies and the people who need space. The broker’s role is to connect those two and get a deal done (a sale) at an optimal price and terms. And most CRE firms have marketing departments to help support that effort. So, how is “selling space” different than selling a widget…or a software subscription license?
To help answer that question and several others, I turned to one of my favorite online CRE personalities who is also a broker and certainly never short of strong opinions and informed insights, Duke Long.
First, in answer to question in the title of this post…
[SS] So, is a CRE broker a salesperson or something different?
[DL] After some thought… “Yes. But, he’s also a dealmaker and a long-term relationship builder.”
[SS] So, how is “selling space” different than selling anything else?
[DL] Paraphrasing “…Well for one thing, our sales cycles can be and usually are, incredibly long. We have to be way out in front of the need. Also, we not only have to sell the space, but we (us or our firms,) often have to sell the client, the building owner as well.”
[SS] So, you’re prospecting for your product inventory as well?
[DL] “Exactly. That’s where relationship building is very important and why, in addition to the sales cycles, we have to spend much of our time doing that work in order to keep our pipeline full.”
[SS] Do you think Brokers get the same kind of lead gen support from their marketing departments and there’s the same kind of closed-loop sales-marketing alignment and performance benchmarking we have here?
[DL] “I would think that kind of structure most likely exists at the larger firms and with broker teams, but I think many brokers have to pay for marketing support in some respects. Often times, particularly at smaller, regional and independent firms, the broker is on his/her own. They’re responsible for creating demand, prospecting, lead gen, supporting materials, etc.”
Now, I’m not sure after speaking with Duke that I see a tremendous difference in what’s involved in selling space than in selling anything else I’ve been a part of. I will concede that the nature of the “product” does have its unique challenges. Buildings and the space in buildings are somewhat amorphous in nature in that its availability is constantly in flux. – It can grow and shrink based on new development and current occupant changes within the terms of their lease, and then space itself is unavailable for set, long periods of time. A broker needs to maintain awareness of those cycles for many properties. …Much like a good sports GM has a ready database of contract terms and maturation dates for all players in the league so that he’s ready to make the right move at the right time.
So, let me share a little insight into our world for some comparison. One of the key things that drive the way we operate, and the way most modern sales organizations function today, is the recognition and acceptance of the fact that people buy differently than they did 10 or even 5 years ago. The buyer is in control of information. They begin information searches online and our sales process and sales cycle is irrelevant. – It’s the buyer’s process and cycle that matter and if want to have a chance to build a relationship, we (sales and marketing) need to be where they are and our strategy and tactics need to support that reality.
We are fanatical about complete sales and marketing team alignment. In addition to corporate and product marketing, our marketing department is responsible for directly contributing to 50% of our annual pipeline growth and 50% of our new business bookings every year. Marketing has SLA’s (service level agreements) with sales for qualified lead definitions and we have specific target goals for those numbers as well as the top stages of our single, shared lead/opportunity funnel or pipeline. We track, measure and report on our performance at each of those stages in terms of both the actual number and the conversion ratios for lead movement from stage to stage. We also benchmark our performance for all of that against an industry standard for comparably sized SaaS technology companies.
So, our marketing team is responsible for creating marketing awareness, and generating demand and leads for the sales team through the production of content, tools, use of social media, building and managing our database and managing all that through our use of marketing automation technology as well as our CRM system, which is the “single source of the truth” for our company. We also nurture leads with content through 3 defined phases of our sales cycle.
There are a lot of moving parts in our process that require constant attention and adjustment, and we’ve been refining it for years, but the process works. And the definition of “works” for us is that we have a model that allows us to forecast results with the application of available resources with a relative degree of certainty. I know exactly how many leads we have delivered to sales and what’s happened to them, how many inquiries it takes to become an opportunity, what channel every single lead came from and all of our conversion and close ratios along the way.
Now real estate brokerage has operated just fine for a very long time without any help from us. So, I’m certainly not advocating that wholesale changes are needed or that this kind of process could work there. But the conversation I referenced did lead me to believe that perhaps there are some things that can be improved. – There are certainly some good questions to ask. – Perhaps beginning with, can CRE sales and marketing departments align their efforts more like other modern sales organizations?
I think the band of technology startups (Hightower, VTS, CompStak, 42Floors, etc.) out there and their investors trying to disintermediate lease information, help manage deal flow and relationships certainly see an opportunity to improve that part of the brokerage business. I think there just might be an equal and as important opportunity to take a fresh look at things from a sales and marketing alignment and process optimization perspective as well.
Discuss amongst yourselves, but please feel free to give me a shout if you think you’d like to learn a bit more about what we do.
Website. Building Engines.